Monday, April 29, 2013

mostly about the west. From a review (2003,unfortunately gated) of James Macdonald's "A nation deep in debt:The financial roots of democracy"
"Governments, he says, began to need ever-increasing amounts of money, mostly in order to wage war, and this need for more and more money necessarily led them to concoct various schemes for extracting funds from their subjects or citizens—first by taxing and then by borrowing. In time those governments that were most successful in inducing their subjects or citizens to lend money to them inevitably became more democratic. That is, governments that were borrowing discovered that identifying their interest more closely with that of their subjects or citizens who were doing the lending was the easiest and cheapest way of raising money; and they could best do this by allowing their subjects or citizens to have a representative say in governing. "Another review again of both James Macdonald's book as well as Bruce Mann's "Republic of Debtors" is here.There is another review by James Glabraith(2006) which is extensively quoted in Economist's View:"Given the simplicity and power of this argument, one reads the epilogue of this great book with surprise and sorrow. In MacDonald’s view, it’s all over. In the nuclear age, deficits and bond drives on the world-war scale are history, and the American citizenry has lost its pride of place as creditor of the American state. Today, financial intermediaries hold about 37 percent of U.S. public debt; Japan and China, along with other countries, now hold about 30 percent. The proportion of U.S. debt owned directly by Americans has fallen to below 10 percent; in 1945 (when the debt was more than twice as large in relation to GDP as now) citizen-creditors just about held it all. He concludes that the link is broken and "for all practical purposes, the venerable marriage between public credit and democratic government, so vital a factor in the history of the world, has been dissolved." "The result seems to be that those who owned more public debt had more say in running the government says Ehud Kaufman in 2010 Return Public Debt to the Public"Citizens in the democratic countries need to reclaim control of their government debt, in order to revitalize the democratic institutions that have been weakened in the last three decades."For the US, the 'overriding fear driving economic policy has been debt hysteria' is leading to permanent unemployed says Paul Krugman. Compared to Europe, there has been recovery in US but only for the top 7% says Paul Salmon. According to James Surowiecki the underground economy in US is now of the order of two trillion dollars.For another take on austerioty see Mark Blyth The Austerity Delusion.

Saturday, April 27, 2013

in his blog as well as Naked Capitalism. From the first comment in Naked Capitalism:
"If such a simple experiment can work to boost a local economy, these experiments should be happening on a massive scale in every community in the nation. We need to be experimenting like crazy, outside the traditional banking sector, to bring our economy back to life......Anyone who desires to break the economic, and hence physical and moral, shackles placed on us by the international banking cartel should be pro-bitcoin, pro-Macon-Money, and pro-experimentation with new currency systems, period."New Scientist article from June 2011 Future of Money: A currency that is building a communityInterview with Kati London, Senior Producer of Macon Money.

Friday, April 26, 2013

in There is no alternative "Instead of clamping down on such abuses, the state has actually tried to ape these more flexible and apparently more efficient arrangements, either by putting many of its core activities out to private tender through complex contracting arrangements or by requiring its internal units to behave as if they were competing firms."There is a discussion of the article in CT.

Some of the recent remarks of Dean Baker and others seem to be similar to those which Michal Kalecki made in the 1943 article 'Political Aspects of Full Employment'. A discussion of some of Kalecki's points is in this post. A quote from Kalecki in the post:

"[U]nder a regime of full employment, the 'sack' would cease to play its role as a disciplinary measure. The social position of the boss would be undermined, and the self-assurance and class-consciousness of the working class would grow. Strikes for wage increases and improvements in conditions of work would create political tension. It is true that profits would be higher under a regime of full employment than they are on the average under laissez-faire; and even the rise in wage rates resulting from the stronger bargaining power of workers is less likely to reduce profits than to increase prices, and thus adversely affects only the rentier interests. But 'discipline in the factories' and 'political stability' are more appreciated than profits by business leaders. Their class instinct tells them that lasting full empoyment is unsound from their point of view, and that unemployment is an integral part of the 'normal' capitalist system."

Dean Baker in a recent article Crashing the 90 Percent Club: 'The Importance of Reinhart-Rogoff Error' says
"The news last week is that the new paper discrediting Reinhart and Rogoff made everything much clearer. The leadership of both major parties is not seeking ways to reduce the budget deficit because there is any reason to believe this will be good for the economy. They are looking for ways to reduce the budget deficit because the wealthy are happy to sustain a situation in which high unemployment weakens workers’ bargaining power. This does not paint a very positive picture of the state of democracy in the United States."From Felix Salmon""Here’s the post-crisis recovery in a nutshell: from 2009 to 2011, the “mean net worth of households in the upper 7% of the wealth distribution rose by an estimated 28%, while the mean net worth of households in the lower 93% dropped by 4%”, according to new report by the Pew Research Center. The reason for this, Pew says, is clear. Capital markets, where the wealthy hold a disproportionate amount of assets, boomed, while the housing market, the biggest source of wealth for most Americans, was flat.

Josh Brown looks at the Pew study and concludes that “wealthy American households have never had it quite so good”. He sees a statistical portrait of American rentiers, a class with “investment portfolios who essentially extract an income from the nation and return very little (in the form of jobs or spending) in comparison to what they take”. At the other end of the spectrum, America’s dealing with the quiet humanitarian disaster of long-term unemployment, which Paul Krugman says is creating an increasingly “permanent class of jobless Americans.”"

Wednesday, April 24, 2013

I was reminded about him by Sri P.P.C.Joshi when I inquired about Ravuri Bharadhwaja. It seems rhat both are seventh graders and were in Tenali around the same time. sarada seems to be his pen name. He was a Tamilian by birth and came to Tenali with his father when he was twelve. He worked as a waiter and wrote on scrapsof paper since he could not afford to buy paper and died at the age of 32. From Trends of Realism in the Telugu Novel "The novels Manchi-Chedu(Good and Evil) and Apasvaraalu(Discordant Notes) written by a hotel-server, Natarajan, under the pen-name of “Sarada” describe graphically the seamy side or urban life and the distress and misery of the lower middle-class and the have-nots especially of the women-folk among them, ruthlessly exploited in individual and family relationships. The perspective is neither psychological nor sociological; there is no “hierarchy of significance”; it is just detached observation, and does not offer either consolations or conclusions. What was said of Flaubert, the great name in Realism, applies here: “He rejected utopianism with a gesture of ascetic defiance–he viewed his age without hope, but also without fear”.8 And the most notable thing was he shed no tears! "More about him in Telugu in the blog karpuramanjari

Tuesday, April 23, 2013

“The computer is not for me. I am an uneducated man from Waziristan,” was his reply. He had tried to take computer courses near the office but the timings never suited him so he had given up on computers.

I told him the Internet was for everyone and went on to YouTube and typed “Excel tutorial Pushto”. And up came a bunch of videos that explained how to use Microsoft Excel in his own native language.

From then he was hooked. He had discovered that he could learn almost anything in his own language from his own home, at his own time for free. A few weeks later, he had created an email account and had started creating the company invoices himself and saved his company a significant amount of money by increasing his own productivity."

Saturday, April 20, 2013

Even though higher education in the US is still producing cutting edge research, there seem to be problems of jobs for many university graduates, a situation that is similar to the one in the US.From Why the US is looking to Germany (via Urbanomics):
"Almost half of Americans with a degree are in jobs that do not require one, according to a study by the Center for College Affordability and Productivity. Fifteen per cent of taxi drivers in the US have a degree, up from 1 per cent in 1970. Likewise, 25 per cent of sales clerks are graduates, against 5 per cent in 1970. An astonishing 5 per cent of janitors now have a bachelor’s degree. They must offer endless nocturnal moments to repent those student loans. Only at the top of the system do the labour and education markets mesh well. PhDs and postgraduates are the only US category to enjoy rising incomes, often dramatically so."The above article suggests that vocational training helps in Germany. It is not clear whether it would help in the US. As Dean Baker says here "The piece also notes the shift of manufacturing jobs to China. This is not a result of inevitable globalization, but rather a policy decision to put manufacturing workers in direct competition with low-paid workers in the developing world, while maintaining or increasing protectionist barriers that allow doctors, lawyers, and other highly paid professsionals from avoid similar competition. The United States has also further disadvantaged manufacturing workers by pursuing a high dollar policy that makes it more difficult for them to compete internationally.

There is little reason to believe that there is anything inevitable about the loss of wages by middle class workers. Rather this is primarily a policy driven outcome."

Friday, April 19, 2013

Paul Krugman in December 2011 "If I have this right, Olivier is suggesting that harsh austerity programs may be literally self-defeating, hurting the economy so much that they worsen fiscal prospects.

This in turn means that the analogy to medieval doctors who bled their patients, then bled them even more when the bleeding made them sicker, is exactly right: austerity reduces growth prospects, leading to calls for even more austerity."

From Washington Post in January 2013 "The International Monetary Fund’s top economist today acknowledged that the fund blew its forecasts for Greece and other European economies because it did not fully understand how government austerity efforts would undermine economic growth.......

Blanchard and Leigh deduced that IMF forecasters have been using a uniform multiplier of 0.5, when in fact the circumstances of the European economy made the multiplier as much as 1.5, meaning that a $1 government spending cut would cost $1.50 in lost output.

What are the implications for the future?

This paper may not be an official position of the IMF, but coming from the agency’s top economist, it is bound to change how the agency generates forecasts."

Jayati Ghosh in 'Country Income Shares in PPP': "...suggests that just three countries (Brazil, China and India) together account for around 30 per cent of global GDP already, around the same as the total share of large Northern countries (Canada, France, Germany, Italy, the UK and the US).If this were an accurate representation of reality it would mark a truly astounding change over the past three decades. but since the output of different countries is measured in terms of 1990 PPP dollars, rather than nominal exchange rates, this greatly exaggerates the extent of change. With nominal exchange rates, the rising trend share of these countries is still evident but not so marked: the GDP of these three countries in 2011 accounted for just above 16 per cent of world GDP according to IMF, (around half of the ratio estimated by the HDR) and their share of total merchandise exports is just above 13 per cent according to the WTO."Catherine Rampell in A history of oopsies in economic studies "...in response to controversies over mistakes, coding disputes and academics under siege who are protective of their data, some top journals like The American Economic Review now require authors to submit data and code “sufficient to permit replication” when sending in a paper. Sometimes the underlying numbers and code must be made publicly available. But there are exceptions, as sometimes the data are proprietary or very sensitive. Researchers have to get special permission to use the highly coveted Social Security records data, for example, and have to agree not to share the numbers with unauthorized parties."Felix Salmon explains Arindrajit Dube's analysis of the famous Rienhart-Rogoff paper "In other words, the causation here seems about as clear as causal analysis can ever be: low growth causes high debt, rather than high debt causing low growth. Indeed, once you get past 90% of GDP, your debt load doesn’t seem to have any significant effect on future growth at all!" Dean Baker In History of Economic errors, Martin Feldstein deserves a mention

P.S. Now, there is a flood of comments and it may take some time before the dust settles down, if ever. So, I will stop with a few more links. Here is the original Reinhart-Rogoff paper and the paper which pointed the errors is here. From a summary of the later paper by Mike Konczal: "They find that three main issues stand out. First, Reinhart and Rogoff selectively exclude years of high debt and average growth. Second, they use a debatable method to weight the countries. Third, there also appears to be a coding error that excludes high-debt and average-growth countries. All three bias in favor of their result, and without them you don't get their controversial result."It seems as Dean Baker complained earlier, the data was not available to others for a long time. Reinhart-Rogoff response mentions a 2012 paper with Vincent Reihart, an economist at Morgan Stanley.
Tyler Cowen wonders about Reinheart-Rogoff paper:
"The most interesting question to me is a rather squirrelly and subjective one: how should this episode change the relative ratios of what I read? Should I in fact read fewer quantitative economics papers, instead (at the margin, of course) preferring more narrative history? This is not the first time that an extremely influential major empirical result has been overturned or at least thrown into serious doubt."A few weeks earlier, he talked of smell test The smell test for an Academic paper.Probably, lot of the updates will be at http://delong.typepad.com/

It was supposed to be a defining moment in Australian sport which made a dent on racism in sport. It happened
twenty years ago: shown at the beginning of this video https://www.youtube.com/watch?v=i5ebT-0izPE and is being celebrated with an exhibition. More here:
"At half-time in the reserves, the pair emerged from the visitors' change rooms, down the players' race, to familiarise McAdam with what was then the most hostile territory for opposing clubs in Australian football.

The race was next to the area occupied by the fanatical Collingwood cheer squad and the racial abuse hurled at the two Aboriginal players from the moment they emerged was so offensive that, two decades on, McAdam still can't bring himself to repeat it. ''I don't want to say what it was, but it was full-on,'' is how he puts it. ''I'll just say that it was racial and it was bad - it was terrible.

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''We just looked at each other and, whether it was me or him, just basically said to each other, 'We're not going to put up with this crap! Let's get out there today and run amok. Let's get first and second best on ground.' And it was funny. It turned out that way and we won the game, which was the most important thing.''

When the siren sounded, and an undermanned St Kilda recorded its first win at the ground in almost two decades, Winmar found himself near the Collingwood cheer squad, and instinctively, spontaneously, raised his arms over his head before lifting his St Kilda guernsey, pointed to his bare brown skin and declared: ''I'm black - and I'm proud to be black!''

As some in the crowd responded with yet more abuse, a defiant Winmar blew a few kisses before jogging to the middle of the ground in and hugging McAdam."

A few years earlier, I went to watch an Australian rules football match and did not like what I heard and never went to see a football match again. So, I do not know whether Winmar;s gesture helped.

Over the last six years, people here have managed to plant over a quarter million trees on the village's grazing commons- inlcuding neem, sheesham, mango, Amla among others.............

On an average 60 girls are born here every year, according to the village's former sarpanch Shyam Sundar Paliwal, who was instrumental in starting this initiative in the memory of his daughter Kiran, who died a few years ago.

In about half these cases, parents are reluctant to accept the girl children, he says.

Such families are identified by a village committee comprising the village school principal along with panchayat and Anganwadi members.Rs. 21,000 is collected from the village residents and Rs.10,000 from the girl's father and this sum of Rs. 31,000 is made into a fixed deposit for the girl, with a maturity period of 20 years.But here's the best part.“We make these parents sign an affidavit promising that they would not marry her off before the legal age, send her to school regularly and take care of the trees planted in her name,” says Mr. Paliwal.People also plant 11 trees whenever a family member dies."

Le Carre comes out of the cold (via 3quarksdaily):
"And I had absolutely no sense of transition from the one war to the other, because in the secret world there barely was one. To the hard-liners of east and west the second world war was a distraction. Now it was over, they could get on with the real war that had started with the Bolshevik Revolution in 1917, and had been running under different flags and disguises ever since.............The merit of The Spy Who Came in from the Cold, then – or its offence, depending where you stood – was not that it was authentic, but that it was credible. The bad dream turned out to be one that a lot of people in the world were sharing, since it asked the same old question that we are asking ourselves 50 years later: how far can we go in the rightful defence of our western values, without abandoning them along the way?."Ashwin Parameswaran thinks that some of the left and the right can combine "Neither the left nor the right is wrong. But both of them only see one side of what is the core strategy of neoliberal crony capitalism – increase the scope and reduce the scale of government intervention........But both the radical left and the radical right need to realise the misguided nature of many of their disagreements. A robust safety net is as important to maintaining an innovative free enterprise economy as the dismantling of entry barriers and free enterprise are to reducing inequality."He also links to his essay All systems need a little disorder

Abi has pointed out a new data based blog and an interesting post there We are the 5%:
"Take a look at the map below. It maps the proportion of households in each district, who told census-takers that they own all of the following – a TV set, a phone, a computer and a vehicle (scooter/motorcycle or car). That number, for the country as a whole, is 4.6% (roughly 11 million households)."I posted the link in my Facebook and there is a comment that the figure is like ninety percent in USA. The point of the post seems to be this five percent is like the one percent in USA, the opinion, decision makers and those who implement the decisions. This seems possible. There are some benefits in India not available in the US. One of my aged relatives recently broke his back and got operated at the government expense and is even getting a pension even though he never worked. When I mentioned this to a friend and inquired how widely such benefits are available, he responded that we the 5% swallow most of the money in those schemes. This tallies with a point that Lant Pritchett made in Everything you think you know about poverty is wrong
"One common belief among people working in international development is that a poor country can be changed by improving its education system, but Pritchett’s research suggests otherwise. The problem in poor countries is that they cannot make effective use of their people’s skills, Pritchett said, so giving them more skills does lead to development. Counter-intuitively, his research has shown that countries whose education system improves actually grow slower on average. He suggests that one reason for this may be that putting more educated people into a corrupt bureaucracy may result in more sophisticated corruption."Another point that puzzles me is that I know many in towns and villagers who have properties worth crores of rupees but do not own personal computers. It is possible that owning personal computer is not yet a measure of influence in India. I am not sure but it seems that the data has to be interpreted carefully.

Saturday, April 13, 2013

From a Credit Slips post : "Rhino Foods in Burlington found that employees in financial strain were not as good at their jobs and that the small loans improved the company’s bottom line. Rhino brought in a combination social worker/financial advisor, who helped arrange 17% income advance loans paid back through wage deductions. Once a loan is paid off, the default rule is that the employee continues to pay into a savings account in the same amount as the prior loan repayment deduction. People who had never saved a dime are now building wealth."
Related PBS video http://video.pbs.org/video/2364991049
(Again via Naked Capitalism links)

From Naked Capitalism Links 4/12/13:
"Poll: Most Women See Bias in the WorkplaceWall Street Journal. Duh!Womenexperience bias everywhere. Barry Ritholtz told me recently that for over 15 years, when his wife would put down hercredit cardto pay for dinner, the waiter would inevitably bring back the charge form to him to sign. Every time. She would sputter to him about it and he would say, “It’s because I have a penis” and sign the receipt. He similarly recounts howwomenhe knows who run businesses and want to get a quote (say for an ITinstallation) will have the salesperson try to find someone else to talk to, assuming the woman can’t be in charge (mind you, I never get this sort of thing, but I send a “don’t fuck with me” vibe rather than normalfemalepoliteness/chipperness).

Recently Barry’s wife looked at the receipt. He’d written “I have a penis” in the signature line. He’d been doing that for 15 years (she dug out some older receipts to confirm) and the restaurant and bank never saw anything amiss."

Thursday, April 11, 2013

I try to keep track of Indian things via internet and visiting about once an year. but I really do not know how things are working for the poor. I heard stories (from a reliable social worker in Hyderabad) of a mother and daughter of whom only one can go out since they have only one decent set of clothes to wear. On the other hand, we have a poor relative of around 90 and at one stage we arranged for him to say in an old people's home paying around three thousand rupees a month. Then he had an accident in the bath room and broke his back. It seems that now he had a free operation under some government scheme and even gets a pension. He never worked, mainly lived off the land and sold most of it. I wonder how widely these schemes are available and how well they are working.

Tuesday, April 09, 2013

AK of 'Songs of Yore' makes a point that I am vaguely aware of but not so much detail:
"Now if you observe carefully you notice a very strange phenomenon. In all these songs the male version caught the popular fancy. The female versions lagged so far behind that many of them became extinct from public memory and it would be difficult to believe that they existed. ......If you somehow block the memory of the male versions and listen to the female versions of the above songs, they are technically sound and quite melodious. Then why even Lata versions pale in comparison to their male counterparts seems inexplicable. Perhaps it has to do with something abstract in the way our senses respond to when the same song is sung by a male and a female singer, and we always seem to be favouring the former."

Here is a possible exception that proves the rule. Geeta Dutt's version of 'preetam aan milo' came after the famous version by C.H. Atma and seem to be popular even though it comes in snatches against different backgrounds:https://www.youtube.com/watch?v=_LywY3L5CCM

'Everything you think you know about poverty is wrong': (via Chris Blattman)
"Counter-intuitively, his research has shown that countries whose education system improves actually grow slower on average. He suggests that one reason for this may be that putting more educated people into a corrupt bureaucracy may result in more sophisticated corruption.....Working temporarily, Prichett suggests, three-year visas would give the poor an opportunity to earn a substantial amount of money, money that could change the trajectory of their lives when they returned home."Some of the earlier posts about Lant Pritchett's ideas here, here, here and here.

Friday, April 05, 2013

First draft of 'Adopted almost invariant sets and splittings of groups' with Vincent Guirardel and Peter Scott is ready if anybody is interested. I assume that it will be ready before the end of year. Peter Scott is a long time collaborator and wrote the paper so far, though he claims that I outlined the arguments a few years ago. My final paper may be some thing that I will not understand.

From The Guardian article Offshore Secrets
"Millions of internal records have leaked from Britain's offshore financial industry, exposing for the first time the identities of thousands of holders of anonymous wealth from around the world, from presidents to plutocrats, the daughter of a notorious dictator and a British millionaire accused of concealing assets from his ex-wife.

The leak of 2m emails and other documents, mainly from the offshore haven of the British Virgin Islands (BVI), has the potential to cause a seismic shock worldwide to the booming offshore trade, with a former chief economist at McKinsey estimating that wealthy individuals may have as much as $32tn (£21tn) stashed in overseas havens....................

As well as Britons hiding wealth offshore, an extraordinary array of government officials and rich families across the world are identified, from Canada, the US, India, Pakistan, Indonesia, Iran, China, Thailand and former communist states..........

The British Foreign Office depends on the BVI's company licensing revenue to subsidise this residual outpost of empire, while lawyers and accountants in the City of London benefit from a lucrative trade as intermediaries."